Analysis & Opinion

BOGOTA, July 9 (Reuters) - Colombia will delay the signing
and enactment of a decree that would encourage pension funds to
diversify their portfolios and invest more overseas, high-level
government and industry sources told Reuters on Tuesday.

The measure, first unveiled in April, had been aimed at
boosting dollar-denominated investments in pension funds'
portfolios and diversifying their risk. Finance Minister
Mauricio Cardenas may announce a delay in signing the decree
this week, the sources said.

The decree was also designed to weaken Colombia's currency.
The government hoped pension funds buying dollars to invest more
overseas would ease pressure on the peso, which last year gained
9 percent and made it one of the world's strongest currencies.

But the steady flow of dollars into Colombia has since
slowed, lessening the need for the decree.

Comments last month from Federal Reserve Chairman Ben
Bernanke that the Fed would likely slow the pace of its
stimulative bond purchases drew investors away from emerging
markets like Colombia, bringing declines in the peso to about 9
percent this year and reducing the need for the measure.

Bernanke's comments also led investors away from the local
Treasury bond market, pushing the yield on the benchmark TES
bond that matures in 2024 up 188 basis points since the
beginning of May on expectations the Fed would pull its economic
stimulus.

Holding back on the pension fund decree may encourage
portfolio managers to bolster purchases of peso-denominated TES
bonds, which historically make up the bulk of their assets.

In April, Deputy Finance Minister Andres Restrepo told
Reuters the decree would be ready in June.